[Federal Register Volume 64, Number 46 (Wednesday, March 10, 1999)]
[Notices]
[Pages 11825-11834]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-5945]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-421-804]
Certain Cold-rolled Carbon Steel Flat Products from the
Netherlands: Final Results of Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of Final Results of Antidumping Duty Administrative
Review.
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SUMMARY: On September 4, 1998, the Department of Commerce (the
Department) published the preliminary results of the administrative
review of the antidumping duty order on certain cold-rolled carbon
steel flat products from the Netherlands (63 FR 47227). This review
covers one manufacturer/exporter of the subject merchandise to the
United States during the period of review (POR), August 1, 1996,
through July 31, 1997. We gave interested parties an opportunity to
comment on our preliminary results. Based on our analysis of the
comments received, we have not changed the results from those presented
in the preliminary results of review.
EFFECTIVE DATE: March 10, 1999.
FOR FURTHER INFORMATION CONTACT: Helen Kramer or Linda Ludwig,
Enforcement Group III, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
0405 or (202) 482-3833, respectively.
SUPPLEMENTARY INFORMATION:
Background
On September 4, 1998, the Department published in the Federal
Register (63 FR 47227) the preliminary results of the administrative
review of the antidumping duty order on certain cold-rolled carbon
steel flat products from the Netherlands (58 FR 44172, August 19,
1993), as amended pursuant to Court of International Trade (CIT)
decision (61 FR 47871, September 11, 1996). The Department has now
completed this administrative review in accordance with section 751 of
the Tariff Act of 1930, as amended.
Applicable Statute and Regulations
Unless otherwise stated, all citations to the Tariff Act of 1930,
as amended (the Act) are references to the provisions effective January
1, 1995, the effective date of the amendments made to the Act by the
Uruguay Round Agreements Act (URAA). In addition, unless otherwise
indicated, all citations to the Department's regulations are to 19 CFR
Part 351 (1998).
Scope of this Review
The products covered by this review include cold-rolled (cold-
reduced) carbon steel flat-rolled products, of rectangular shape,
neither clad, plated nor coated with metal, whether or not painted,
varnished or coated with plastics or other nonmetallic substances, in
coils (whether or not in successively superimposed layers) and of a
width of 0.5 inch or greater, or in straight lengths which, if of a
thickness less than 4.75 millimeters, are of a width of 0.5 inch or
greater and which measures at least 10 times the thickness or if of a
thickness of 4.75 millimeters or more are of a width which exceeds 150
millimeters and measures at least twice the thickness, as currently
classifiable in the Harmonized Tariff Schedule (HTS) under item numbers
7209.15.0000, 7209.16.0030, 7209.16.0060, 7209.16.0090, 7209.17.0030,
7209.17.0060, 7209.17.0090, 7209.18.1530, 7209.18.1560, 7209.18.2550,
7209.18.6000, 7209.25.0000, 7209.26.0000, 7209.27.0000, 7209.28.0000,
7209.90.0000, 7210.70.3000, 7210.90.9000, 7211.23.1500, 7211.23.2000,
7211.23.3000, 7211.23.4500, 7211.23.6030, 7211.23.6060, 7211.23.6085,
7211.29.2030, 7211.29.2090, 7211.29.4500, 7211.29.6030, 7211.29.6080,
7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7215.50.0015,
7215.50.0060, 7215.50.0090, 7215.90.5000, 7217.10.1000, 7217.10.2000,
7217.10.3000, 7217.10.7000, 7217.90.1000, 7217.90.5030, 7217.90.5060,
and 7217.90.5090. Included in this review are flat-rolled products of
non-rectangular cross-section where such cross-section is achieved
subsequent to the rolling process (i.e., products which have been
``worked after rolling'')--for example, products which have been
beveled or rounded at the edges. Excluded from this review is certain
shadow mask steel, i.e., aluminum-killed, cold-rolled steel coil that
is open-coil annealed, has a carbon content of less than 0.002 percent,
of 0.003 to 0.012 inch in thickness, 15 to 30 inches in width, and has
an ultra flat, isotropic surface. These HTS item numbers are provided
for convenience and Customs purposes. The written description remains
dispositive.
The POR is August 1, 1996, through July 31, 1997. This review
covers entries of certain cold-rolled carbon steel flat products from
the Netherlands by Hoogovens Staal B.V. (Hoogovens).
Analysis of Comments Received
We gave interested parties an opportunity to comment on the
preliminary results. We received case briefs on October 13, 1998, and
rebuttal briefs on October 19, 1998, from the respondent (Hoogovens)
and petitions (Bethlehem Steel Corporation, U.S. Steel Company (a Unit
of USX Corporation), Inland Steel Industries, Inc., Geneva Steel, Gulf
States Steel Inc. of Alabama, Sharon Steel Corporation, and Lukens
Steel Company).
Comment 1: Classifying U.S. Sales as EP or CEP Sales
Petitioners urge the Department to reclassify sales that Hoogovens
reported as Export Price (EP) sales as Constructed Export Price (CEP)
sales. Petitioners argue that all of Hoogoven's direct sales should be
treated as CEP sales because the role of Hoogovens' U.S. affiliate,
HSUSA, in the sales process was allegedly more than merely incidental
or ancillary. Petitioners cite U.S. Steel Group--a Unit of USX
Corporation v. United States, Slip Op. 98-96 (U.S. Court of
International Trade (CIT), 1998) (``U.S. Steel Group'') and Certain
Cold-
[[Page 11826]]
Rolled and Corrosion-Resistant Carbon Steel Flat Products from Korea;
Final Results of Antidumping Duty Administrative Reviews, 63 FR at
13182 (March 18, 1998) (``Korean Flat Products''), as supporting CEP
treatment of sales treated as EP in previous reviews.
Petitioners argue that the Department has previously found that
contacting customers and soliciting orders are selling functions that
are more than merely incidental or ancillary to U.S. sales, citing
Notice of Final Determination of Sales at Less Than Fair Value:
Stainless Steel Wire Rod from Spain, 63 FR 40391, 40395 (July 29, 1998)
(``Spanish Wire Rod''); Certain Porcelain-on-Steel Cookware from
Mexico; Final Results of Antidumping Duty Administrative Review, 63 FR
at 38377 (July 16, 1998); and Notice of Final Determination of Sales at
Less Than Fair Value: Stainless Steel Wire Rod from Italy, 63 FR 40422
(July 29, 1998) (``Italian Wire Rod''). Petitioners claim that HSUSA
officials participate in contract discussions between Hoogovens and
customers, sometimes negotiate contract terms without any Hoogovens
officials being present, and do not receive price guidelines from
Hoogovens. Petitioners cite the Department's verification report, which
stated that HSUSA informs Hoogovens whether price quotes received from
U.S. customers are reasonable based on its research into market prices.
Vertification at Hoogovens Steel USA, Inc., July 15, 1998 (July 21,
1998) at 3 (Public Version). Petitioners argue that the Department and
the CIT have found that negotiating sale terms with U.S. customers is a
substantive sales function supporting CEP treatment of U.S. sales.
Koenig & Bauer-Albert v. United States, Consol, Ct. Slip Op. 98-83
(CIT, June 23, 1998); Notice of Final Determination of Sales at Less
Than Fair Value: Stainless Steel Wire Rod from Korea, 63 FR 40404,
40418 (July 29, 1998) (``Korean Wire Rod''); Italian Wire Rod, 63 FR
40422. Petitioners refer to a statement in the Department's
verification report that HSUSA is always involved with the service
technician's visits to U.S. customers. Verification of Sales at
Hoogovens Staal B.V., Beverwijk and IJmuiden, the Netherlands, June 8-
12, 1998 at 9. Petitioners argue that HSUSA provides significant other
after-sale support functions which are more than incidental or
ancillary, including quarterly sales visits to U.S. customers, and
troubleshooting performance problems, both in product quality and
delivery services.
Petitioners allege that Hoogovens' claim that it has to approve all
contract terms negotiated by HSUSA is unsubstantiated, and that during
the POR Hoogovens never rejected any contract term, including price.
Petitioners therefore urge the Department to ignore Hoogovens' claim.
Petitioners further argue that even if the claim that Hoogovens has to
approve all prices were substantiated, under Department practice this
would not mean that HSUSA's role was incidental or ancillary (citing
Korean Flat Products, 63 FR at 13177).
Petitioners cite the CIT's decision in U.S. Steel Group, where the
court held that the U.S. affiliate was more than a mere processor of
sales-related documentation and a communications link, despite the fact
that the foreign producer set minimum prices above which the U.S.
affiliate could negotiate. On this basis, petitioners argue that the
case for reclassifying Hoogovens' sales as CEP is even stronger,
because Hoogovens does not give HSUSA any price guidelines, except the
U.S. Steel price list, which is used to determine the prices for
extras. See Vertification of Sales at Hoogovens Staal B.V. at 4.
Petitioners claim that the absence of a set minimum price shows that
HSUSA's negotiating authority is broader than that of the U.S.
affiliate in U.S. Steel Group, where the CIT upheld CEP treatment
because of the U.S. affiliate's activities, even though the foreign
producer responded to customer inquiries with a price quote and
provided daily guidance to its U.S. affiliate regarding prices and
product specifications.
Hoogovens argues that reclassification of its sales reported as EP
is unwarranted because there have been no changes in the facts or law
and regulations, pointing out that in the investigation and three prior
administrative reviews the Department has consistently treated
Hoogovens' direct U.S. sales as EP sales. Furthermore, Hoogovens cites
the Statement of Administrative Action (SAA) accompanying the Uruguay
Round Agreements Act, which states that no change is intended in the
circumstances under which EP or CEP is used. SAA at 822-23. Petitioners
rejoin that in other cases where the facts on the record of a
particular review showed that the U.S. affiliate's role was more than
incidental or ancillary, the Department reclassified U.S. sales as CEP
despite having treated those sales as EP in prior reviews. Petitioners
cite the decision in Asociacion Colombiana de Exportadores de Flores v.
United States, 6 F. Supp. 2d 865 (CIT, 1998), in which the court held
that ``Commerce has the flexibity to change its position providing that
it explain[s] the basis for its change and providing that the
explanation is in accordance with law and supported by substantial
evidence.''
Although in Hoogovens' view the Department appears recently to have
applied a lower threshold for the number and level of services required
for a CEP finding, even under the standards articulated in Certain Cut-
to-Length Carbon Steel Plate from Germany; Final Results of Antidumping
Duty Administrative Review, 62 FR 18390 (April 15, 1997) (``German
Plate'') and in Korean Flat Products, 63 FR at 13182-83 (March 18,
1998), Hoogovens argues that its sales should still be classified as
EP. In the cited German Plate and Korean Flat Products cases, Hoogovens
points out that the Department paid particular attention to the
respective levels of involvement in the sales negotiation process of
the U.S. affiliate and the foreign exporter. In both cases, Hoogovens
argues, the U.S. affiliate had significant, and almost exclusive,
responsibility for both the setting and negotiation of prices.
Hoogovens cites the Department's conclusion in Korean Flat Products
that respondent's U.S. customers ``seldom have contact'' with the
foreign exporter in Korea, and the CIT's affirmance of the Department's
CEP classification in the German Plate case on the grounds that the
U.S. affiliate had flexibility to make decisions on its own as to
price, and that communication regarding prices between respondent and
the U.S. affiliate was not on a continuous basis. Hoogovens points to
the Department's decision in Certain Welded Stainless Steel Pipe from
Taiwan; Final Results of Antidump Duty Administrative Review, 63 FR
38382, 38385 (July 16, 1998) (``Pipe from Taiwan'') that mere
participation by a U.S. affiliate in sales-related communication does
not justify CEP classification. In that case, the Department concluded
that EP classification is appropriate where there is no record evidence
to indicate that the U.S. affiliate has any independent authority to
negotiate or set prices for direct sales in the United States.
According to Hoogovens, the Department concluded that the fact that the
U.S. affiliate has no say whatever in the profitability of its own
sales of the subject merchandise by determining the amount of a price
markup was further evidence that the entire sales process is controlled
by the producer in Taiwan. Hoogovens contrasts this to the German Plate
case, where the U.S. affiliate could negotiate above a minimum price
[[Page 11827]]
established by the foreign exporter. Finally, Hoogovens notes, in Pipe
from Taiwan the Department pointed to the fact that unaffiliated U.S.
customers maintain direct contact with the foreign exporter as an
indicator that the U.S. affiliate was not involved in negotiations,
further distinguishing the case from Korean Flat Products and German
Plate.
Hoogovens argues that the record in this review is replete with
evidence that, as in Pipe from Taiwan, Hoogovens' U.S. affiliate has no
independent negotiating authority, no incentive to increase
profitability, and serves only as a facilitator in the sales process,
thus distinguishing this case from German Plate and Korean Flat
Products. Hoogovens further maintains that the record clearly
establishes that it maintains direct communications links with its U.S.
customers and engages in continuous and frequent communications with
these customers without the involvement of HSUSA, pointing out that
such contact was infrequent or non-existent in German Plate and Korean
Flat Products.
Hoogovens insists that the Department's statement in the
preliminary results of review in this case that ``Hoogovens has stated
that HSUSA negotiates prices with U.S. customers, subject to Hoogovens'
approval'' is without foundation, and that nowhere in the record or any
of the verification reports or memoranda filed in this case is there
any evidence to support such a statement. While Hoogovens acknowledges
that HSUSA communicates offers and quotes back and forth between
Hoogovens and its customers, it insists that the record supports the
conclusion that HSUSA does not have authority to engage in negotiations
of prices or any other terms of sale with Hoogovens' U.S. customers.
According to Hoogovens, the Department did not reach its CEP
finding in German Plate and Korean Flat Products based on an isolated
examination of the U.S. affiliate's participation in sales
negotiations, but rather on the totality of sales services performed by
the affiliate, which in each case were substantial. In their case brief
in German Plate, petitioners enumerated the U.S. affiliate's sale
activities they considered to be appropriate grounds for reclassifying
sales as CEP. In addition to setting and negotiating of prices, these
activities included purchasing and reselling the subject merchandise,
bearing risk of loss, holding itself out as the seller of the
merchandise, financing the sale to the unaffiliated U.S. customer, and
creating and maintaining extensive sales documentation. According to
Hoogovens, the evidence on the record of this case makes clear that
HSUSA performs none of those functions.
Hoogovens contrasts its circumstances to Korean Wire Road, 63 FR
40418-19 (July 29, 1998), where the U.S. affiliate took title to the
merchandise in back-to-back transactions, whereas Hoogovern's sales are
made directly to the U.S. customer, and HSUSA never takes title to the
subject merchandise. In Korean Wire Rod, the Department classified
respondent's sales as EP in circumstances where the sales process was
allegedly similar to Hoogovens', but the U.S. affiliate was more
involved in the sale process than was HSUSA. Hoogovens also
distinguishes its situation from the circumstances in Spanish Wire Rod,
in which the Department reclassified sales the respondent reported as
EP as CEP. Hoogovens argues that in Spanish Wire Rod the key factors in
the Department's decision were that the U.S. affiliate could accept the
customer's order for certain sales without seeking the approval of the
foreign producer/exporter, and that there was no evidence of direct
contact between the foreign producer/exporter and the unaffiliated U.S.
customer. Hoogovens claims that HSUSA had no independent negotiating
authority and that the record is replete with evidence of direct
contact between Hoogovens and its unaffiliated U.S. customers,
including contacts that do not involve HSUSA. Hoogovens cites HSUSA
Verification Exhibit 4 at 27, which refers to a price agreed to in the
Netherlands between Hoogovens' sales director and the president of
Hoogovens' largest U.S. customer for the subject merchandise. Hoogovens
argues that the Department's use of the word ``negotiate'' in its
verification report, where it stated that ``HSUA needs final approval
from Hoogovens on sales details it negotiates with the customers,''
does not undermine the extensive evidence indicating that HSUSA's role
in the sales process is limited to relaying price offers back and forth
between Hoogovens and the customers and that HSUSA has no independent
authority to negotiate sales on behalf of Hoogovens. Hoogovens rejects
petitioners' claim that HSUSA solicits orders, pointing out that there
has been no expansion in the U.S. customer base during this or previous
PORs, and that the sole basis for this claim is the legal authority to
solicit sales in the Amended Agency Agreement, which also specifies
that HSUSA has no legal authority to act on behalf of Hoogovens.
Hoogovens argues that petitioners have misconstrued the Department's
statement in the HSUSA verification report that Hoogovens does not
provide price guidelines to be used by HSUSA in negotiating prices as
meaning that HSUSA has unfettered negotiating authority. On the
contrary, according to Hoogovens, the Department made this statement to
highlight the fact that Hoogovens does not set parameters within which
HSUSA may then independently negotiate. Rather, Hoogovens states, it
sets prices itself and does not grant HSUSA any negotiating authority
whatever, but uses HSUSA to relay price offers back and forth to its
customers. Hoogovens claims that the record of this review is replete
with evidence that Hoogovens sets the terms for its U.S. sales and
communicates this information to its customers either directly or
through HSUSA. Accordingly, Hoogovens asserts that it does not reject
prices ``negotiated'' by HSUSA, but rather its normal sales process
does not provide HSUSA with the opportunity to agree to prices with the
customer and submit them to Hoogovens for final approval. Consequently,
Hoogovens argues, petitioners are misinterpreting the relevance of the
CIT's decision in U.S. Steel Group to this case.
Hoogovens claims that petitioners have failed to demonstrate how
the exchange of market information between HSUSA and Hoogovens
constitutes negotiations with the unaffiliated customer, arguing that
HSUSA's activities represent a communications link. Similarly,
Hoogovens rejects petitioners' contention that HSUSA negotiates or
drafts contracts, citing the Department's finding at verification that
HSUSA prepares the contract forms after price and quantity have been
agreed upon between Hoogovens and the U.S. customer as a customary
practice carried over from an earlier corporate structure predating the
formation of NVW, HSUSA's predecessor affiliated company. HSUSA
Verification Report at 3.
Hoogovens rebuts petitioners' claim that HSUSA provides technical
services by noting that their argument involves a misreading of a
statement in the Department's verification report that HSUSA ``is
always involved'' with the technician's visits to U.S. customers.
Hoogovens points out that this involvement consisted primarily of
arranging the logistics of these service visits. Hoogovens argues
further that in the cases cited by petitioners in which after sales
services were at issue, the U.S. affiliate took sole responsibility
for, and performed substantial services on
[[Page 11828]]
behalf of, the foreign producer, and these services were only a small
part of the wide array of services provided by the U.S. affiliate.
Hoogovens asserts that whatever services HSUSA performed were at most
incidental.
Department's Position: We agree with Hoogovens and have continued
to treat its direct U.S. sales as EP for purposes of the final results
of review. To ensure proper application of the statutory definitions of
EP and CEP, where a U.S. affiliate is involved in making a sale, we
consider the sale to be CEP unless the record demonstrates that the
U.S. affiliate's involvement in making the sale is incidental or
ancillary. Thus, whenever sales are made prior to importation through
an affiliated sales agent in the United States, the Department
determines whether to characterize the sales as EP sales based upon the
following criteria: (1) Whether the merchandise was shipped directly to
the unaffiliated buyer, without being introduced into the affiliated
selling agent's inventory; (2) whether this procedure is the customary
sales channel between the parties; and (3) whether the affiliated
selling agent located in the United States acts only as a processor of
documentation and a communications link between the foreign producer
and the unaffiliated buyer. See e.g., Notice of Final Determination of
Sales at Less Than Fair Value: Newspaper Printing Presses From Germany,
61 FR 38175 (July 23, 1996); Certain Corrosion Resistant Carbon Steel
Flat Products From Korea: Final Results of Antidumping Administrative
Review, 61 FR 18547, 18551 (April 26, 1996); Certain Cut-To-Length
Carbon Steel Plate From Germany: Final Results of Antidumping Duty
Administrative Review, 62 FR 18390 (April 15, 1997); Certain Cold-
Rolled and Corrosion Resistant Carbon Steel Flat Products From Korea:
Final Results of Antidumping Duty Administrative Reviews, 63 FR 13170,
13177 (March 18, 1998).
In the preliminary results, we considered this issue and concluded
that Hoogovens' U.S. sales through HSUSA satisfied at least two out of
the three criteria the Department uses to determine whether sales are
EP, i.e., method of shipment and customary channel of trade. In regard
to the third criterion, the affiliate's role in the sales process, we
determined that HSUSA did not engage in the types of activities the
Department considers in classifying U.S. sales as CEP, such as: taking
title to the subject merchandise, maintaining inventory, conducting
customer credit checks, financing sales, providing technical service,
receiving compensation based on price or quantity, and issuing order
confirmations and invoices. In addition, HSUSA received payments from
customers only in exceptional circumstances, i.e., when customers lack
the capacity to make wire transfers. The Department invited additional
information on whether the U.S. affiliate acts only as a processor of
documentation and a communications link between the foreign producer
and the unaffiliated buyer in the United States. See Preliminary
Results, 63 FR at 47228-29.
In the instant review, the sales in question were made prior to
importation to unaffiliated customers in the United States. The fact
that the subject merchandise was shipped directly from Hoogovens to the
unaffiliated U.S. customers and that this was the customary commercial
channel between these parties is not disputed. The issue is whether
HSUSA's role in the sales process was incidental or ancillary to the
sale, i.e., limited to that of a processor of sales-related
documentation and a communications link.
The record in this case shows that HSUSA was involved in the sales
process as a facilitator, processor of documentation and a
communications link, and that the preponderance of selling functions
involved in U.S. sales occurred in the Netherlands. This finding is
consistent with the Department's practice in other cases cited by
petitioners. In contrast with the respective roles of the producer and
its U.S. affiliate in Spanish Wire Rod, HSUSA has no authority to
negotiate prices, nor did it initiate contact with the U.S. customers
on its own authority. In addition, we note that the petitioners'
citation to Korean Flat Products is not relevant here. In Korean Flat
Products, one of the U.S. affiliates had the authority to write and
sign sales contracts, while another performed significant after-sale
support functions. Neither of these conditions applies in this case.
While HSUSA writes contracts on behalf of Hoogovens, it merely
records the agreement reached between Hoogovens and its customer. It
has no authority to approve the terms. Although the Department's
verification report paraphrased a Hoogovens official as stating that
``HSUSA is the primary contact with Hoogovens' customers but needs
final approval from Hoogovens on sales details it negotiates with the
customers,'' (Hoogovens Verification Report at 4) a preponderance of
the evidence nevertheless shows that HSUSA is a facilitator and
communications link between U.S. customers and Hoogovens in negotiating
sales contract terms.
Hoogovens sales representatives visited U.S. customers at least
once a year, accompanied by HSUSA officials, who arranged the visits.
U.S. customers visited Hoogovens either annually or biannually.
Hoogovens concluded annual contracts with its U.S. customers in October
or November, setting base prices for the first quarter or half of the
coming year and annual quantities. These negotiations usually occurred
in the United States, and occasionally in the Netherlands, depending on
the schedule of customer visits to Hoogovens. HSUSA served as the
intermediary between U.S. customers and Hoogovens, relaying customer
price quotes and quantities to the Netherlands and advising Hoogovens
whether the quotes were reasonable on the basis of HSUSA's research
into market conditions. HSUSA then transmitted Hoogovens' replies to
the customer. The record shows that HSUSA was in constant daily
communication with Hoogovens. HSUSA had no independent authority to set
prices or accept orders. When agreement was reached between Hoogovens
and the customer, HSUSA drew up and signed the sales contract on behalf
of Hoogovens. Hoogovens issued an order confirmation to the customer.
Customers indicated by facsimile the schedule of desired delivery
dates, either directly to Hoogovens or through HSUSA. Hoogovens
arranged for shipment to the United States. HSUSA processed the U.S.
Customs declarations. During the POR, HSUSA acted as the importer of
record for some shipments, while for others Hoogovens was the importer.
In those cases in which the terms of sale required arranging for U.S.
internal freight, HSUSA made the arrangements with freight forwarders.
Hoogovens issued the invoices, performed credit checks, financed
customer credit, and recorded the sales in its accounts. Most customers
paid Hoogovens directly by wire transfers. HSUSA received payments by
check in a small number of instances from customers lacking wire
transfer facilities, and remitted payment to Hoogovens by wire after
the checks cleared.
Although the agency agreement authorizes HSUSA to solicit new
customers and orders, there is no indication that this was a
substantial function during this review, as Hoogovens correctly pointed
out that its U.S. customer base for the subject merchandise has not
changed between this review and the preceding ones.
[[Page 11829]]
Second, HSUSA's role in after-sale support functions is limited to
facilitating visits by Hoogovens' service technician and serving as a
communications link to relay complaints. If there were any problems
with the quality of the merchandise, HSUSA relayed customer complaints
to Hoogovens. HSUSA sales representatives discussed quality issues with
customers during their quarterly vists. HSUSA made arrangements for
U.S. technical service visits by the technician based in the
Netherlands. All technical services were provided by Hoogovens. U.S.
customers communicated directly with Hoogovens regarding post-sale
price adjustments for quality defects or unacceptable variances in coil
weights. U.S. customers also communicated directly with Hoogovens
regarding new applications and trial runs.
Based upon the functions performed by Hoogovens and HSUSA, we
conclude that HSUSA's role in the sales process was to act as a
processor of documentation and a communications link. Therefore we have
continued to treat Hoogovens' sales as EP sales in this case.
Comment 2: Deduct Indirect Selling Expenses
Petitioners point out that Hoogovens reported the indirect selling
expenses (ISE) incurred by HSUSA in the field for ISE incurred in the
Netherlands (DINDIRSU), and ask the Department to deduct DINDIRSU in
calculating CEP if the Department reclassifies the U.S. sales that were
reported as EP.
Hoogovens responds that if the Department deducts HSUSA's ISE, it
should take care not to deduct ISE incurred in the Netherlands from the
CEP, in accordance with the Department's practice of deducting only
expenses associated with economic activity in the United States.
Department's Position: As we have not reclassified EP sales, these
arguments are moot.
Comment 3: Level of Trade of CEP Sales
Hoogovens argues that if the Department reclassifies the sales
reported as EP as CEP, it must reconsider its determination that all of
the sales were at the same level of trade (LOT), and should either make
a CEP offset to normal value or it should not deduct certain expenses
incurred in the Netherlands from CEP in its margin calculations.
Department's Position: As we have not reclassified EP sales, these
arguments are moot.
Comment 4: Date of Sale
Petitioners argue that the Department should use the invoice date
as the date of sale for all of Hoogovens' home market sales. For most
of its home market sales, Hoogovens reported the date of long-term
contracts as the date of sale. Petitioners argue that the record shows
that these contracts did not contain binding quantities, and that the
sales database shows that the quantities sold sometimes deviated from
the amount specified in the contracts.
Hoogovens responds that the Department should continue to use the
reported dates of sale for the final results, pointing out that at
verification the Department found no discrepancies in Hoogovens'
reported date of sale and verified that the price and quantity were
established in the contract for all relevant home market sales
examined, taking into account that deviations in quantity up to ten
percent are considered normal in the steel industry. Hoogovens
considers it ironic that petitioners are now making this argument, when
in the previous review they made the opposite argument in objecting to
Hoogovens' initial use of the invoice date as the date of sale (a
change from previous practice in response to the Department's new
regulations, which was reversed in a supplemental response). Hoogovens
also reports that in responding to petitioners' comments, it found an
error in coding the date of sale for one quarter of a customer's
contracts.
Department's Position: We agree with Hoogovens. Its methodology for
determining the date of sale in this review is consistent with the
three previous reviews. Further, in this review the Department verified
that long-term contracts established the prices and quantities.
In regard to the clerical error reported by Hoogovens in its
rebuttal brief, in light of the decision of the United States Court of
Appeals for the Federal Circuit (CAFC) in NTN Bearing Corp. v. United
States, Slip. Op. 94-1186 (Fed. Cir. 1995) (NTN), we have adopted the
following policy for correcting clerical errors of respondents brought
to our attention after the preliminary results. We accept corrections
of such errors if all of the following conditions are satisfied: (1)
the error in question must be demonstrated to be a clerical error, not
a methodological error, an error in judgment, or a substantive error;
(2) the Department must be satisfied that the corrective documentation
provided in support of the clerical error allegation is reliable; (3)
the respondent must have availed itself of the earliest reasonable
opportunity to correct the error; (4) the clerical error allegation,
and any corrective documentation, must be submitted to the Department
no later than the due date for the respondent's administrative case
brief; (5) the clerical error must not entail a substantial revision of
the response; and (6) the respondent's corrective documentation must
not contradict information previously determined to be accurate at
verification. See Roller Chain, Other Than Bicycle From Japan: Final
Results and Partial Rescission of Antidumping Duty Administrative
Review, 63 FR 63671 (November 16, 1998); Certain Fresh Cut Flowers From
Colombia; Final Results of Antidumping Duty Administrative Reviews, 61
FR 42833, 42834 (August 19, 1996).
In this case, conditions two, three and four are not met. Hoogovens
did not avail itself of the earliest reasonable opportunity to correct
the error. In its corrections letter submitted at the beginning of
verification (Verification Exhibit 1), Hoogovens reported an error in
the date of sale for some of the sales in question here, but gave the
wrong date as the correction. In addition, the corrections at issue
were submitted in the rebuttal brief, rather than the case brief, and
are thus too late. Moreover, while the number of shipments reported on
both occasions as having incorrect dates of sale is the same, there are
some differences between the two lists in which sales are included. We
therefore conclude that the later corrections list is not reliable.
Consequently, we have not made these corrections to the date of sale.
Comment 5: Exclude Movement Expenses from CEP Profit Calculation
Petitioners state that the Department should exclude movement
expenses from the denominator of the ratio used to determine the profit
to be deducted from CEP sales, on the grounds that in U.S. Steel Group,
the CIT held that ``movement expenses may not be included in the
denominator of the ratio to be applied to actual total profit.''
Hoogovens rejoins that pending the resolution of the remand in U.S.
Steel Group, the Department should not depart from the methodology used
in the preliminary results. Hoogovens submits that the statutory
reference to all expenses incurred in the production and sale of the
subject merchandise must be read to include movement expenses, which
are an essential element of making any sale. In addition, Hoogovens
notes, the court appeared concerned that the numerator in the
allocation of total profit to CEP sales, CEP selling expenses
(``CEPSELL''),
[[Page 11830]]
should be in symmetry with the denominator, total selling expenses
(``TOTEXP''). Hoogovens argues that it is not clear that the statute
requires such symmetry, pointing out that the purpose of the CEP profit
calculation is to determine the amount of profit allocable to selling
activities in the United States, which is then deducted from the U.S.
price. Hoogovens contends it is reasonable for the Department to
conclude that the statute does not intend to allocate profit to the
cost of moving goods within the United States, even though such
movement costs are included in the calculation of the respondent's
total expenses in both markets. Thus, Hoogovens concludes, symmetry in
mathematical calculations does not comport with or serve the statutory
goal, and the Department should not revise it methodology for the final
results in this review.
Department's Position: We agree with Hoogovens. The Department is
currently appealing the CIT decision in U.S. Steel Group, and will
continue to follow its policy of including movement expenses in the
denominator of the CEP profit calculation in accordance with the
Department's interpretation of section 772(f) of the Act. See Policy
Bulletin 97.1, ``Calculation of Profit for Constructed Export Price
Transactions,'' (September 4, 1997).
Nothing in the statute or its legislative history requires that the
Department include exactly the same kinds of expenses in total United
States expenses as it includes in total expenses for purposes of
allocating an amount of profit for constructing an export price. To the
contrary, the statute narrowly defines ``total United States expenses''
(the numerator) to include only commissions, direct and indirect
selling expenses, expenses assumed by the seller on behalf of the
purchaser, and the cost of further manufacturing. See sections
772(f)(2)(B) and 772(d)(1) and (2). Thus, the statute prohibits the
inclusion of movement expenses in the calculation of total United
States expenses. In our view, the exclusion of express language on
movement expenses demonstrates that Congress did not intend that
Commerce deduct any profit allocated to the cost of moving goods for
purposes of constructing an export price. Furthermore, the statute
cannot be interpreted to require symmetry in the CEP profit ratio
(i.e., that the same types of expenses be included in both the
numerator and denominator) because the statute provides that other
expenses, other than movement expense, shall be included in the total
expenses denominator, but does not require inclusion of such expenses
in the U.S. expense numerator (e.g., U.S. import duties and export
taxes; see sections 772(c)(2)(A) and (B)).
Unlike the definition of ``total United States expenses,'' the
statute does not further define ``total expenses'' incurred in the
production and sale of the merchandise. In fact, the CIT acknowledged
that ``the language defining total expenses is not entirely clear as to
whether movement expenses should be included in the total expenses
denominator.'' U.S. Steel Group, at 3. However, section 772(f) of the
Act requires the Department to use ``total actual profit'' in
calculating the CEP profit deduction. To the extent that the producer/
exporter and its U.S. affiliates incur movement expenses to deliver the
merchandise to customers, these expenses must be included in total
expenses in order to calculate actual profit. Indeed, this
interpretation is based on the axiom that total profit equals total
revenue minus total expenses, and resolves any confusion surrounding
the definition of total expenses in favor of the inclusion of movement
expenses. Furthermore, we do not believe it is reasonable to interpret
the term ``total expenses'' one way in calculating a respondent's total
actual profit, and another way in summing expenses for the denominator
of the CEP profit ratio. Rather, a reasonable interpretation requires a
unified reading and application of the CEP profit provisions in which
the meaning of ``total expenses'' does not vary.
To calculate the profit to be allocated to CEP sales, total actual
profit is multiplied by the ratio of total United States expenses to
total expenses. Thus, no portion of total profit is allocated to U.S.
movement expenses for purposes of calculating the CEP, but all movement
expenses, like any other expense incurred by the seller, must be
included in total expenses in order to calculate total profit
accurately. Because the statutory goal of accurately calculating total
profit and reasonably allocating a portion of the total profit to CEP
sales is served by the Department's current CEP profit methodology, we
have continued to apply the methodology established in Policy Bulletin
97.1.
Comment 6: Offset for Cost of Financing Cash Deposits
Hoogovens claims that the Department's decision in the previous
review to deny an offset to its reported U.S. indirect selling expenses
(ISE) for the cost of financing cash deposits of estimated antidumping
duties during the POR is incorrect, and that the Department should
grant this adjustment for the reasons stated in the bearings
determinations. See Tapered Roller Bearings and Parts Thereof, Finished
and Unfinished, from Japan, and Tapered Roller Bearings, Four Inches or
less in Outside Diameter, and Components Thereof, from Japan; Final
Results of Antidumping Duty Administrative Reviews and Termination in
Part, 62 FR 11825, 11826-30 (March 13, 1997).
Hoogovens submits that the CIT has consistently upheld the
Department's exercise of its discretion to make this adjustment, citing
Timken Company v. United States, Ct. No. 97-04-00562, Slip. Op. 98-42
at 4-10 (CIT, July 2, 1998); Timken Company v. United States, 989 F.
Supp. 234, 250-55 (CIT 1997). Finally, Hoogovens claims this adjustment
can be readily calculated using data already on the record.
Petitioners urge the Department to adhere to its decision to deny
this adjustment, citing Antifriction Bearings (Other than Tapered
Roller Bearings) and Parts Thereof from France, Germany, Italy, Japan,
Romania, Singapore, Sweden and the United Kingdom; Final Results of
Antidumping Duty Administrative Review, 63 FR 3320, 33348 (June 18,
1998) (``AFBs'') and Tapered Roller Bearings and Parts Thereof,
Finished and Unfinished, from Japan; Final Results of Antidumping Duty
Administrative Review, 63 FR 20585, 20595 (April 27, 1998). Petitioners
point out that Hoogovens does not address any of the Department's
reasons for denying offsets for the cost of financing cash deposits,
and instead cities one of the older cases whose methodology the
Department has rejected. Petitioners conclude that the request for an
adjustment should be denied because Hoogovens provides no reason for
the Department to change its policy.
Department's Position: We agree with petitioners that we should
continue to deny an adjustment to Hoogovens' U.S. ISE for expenses
which Hoogovens claims are related to the financing of cash deposits.
The statute does not contain a precise definition of what constitutes a
selling expense. Instead, Congress granted the administering authority
broad discretion in this area. It is a matter of policy whether we
consider there to be any financing expenses associated with cash
deposits. We recognize that we have, to a limited extent, allowed
deductions of such expenses in past reviews of the orders on
antifriction bearings. However, we have reconsidered our position on
this matter and have concluded that this practice is inappropriate.
[[Page 11831]]
We have long maintained, and continue to maintain, that antidumping
duties, and cash deposits of antidumping duties, are not expenses that
we should deduct from U.S. price. To do so would involve a circular
logic that could result in an unending spiral of deductions for an
amount that is intended to represent the actual offset for the dumping.
We have also declined to deduct legal fees associated with
participation in an antidumping case, reasoning that such expenses are
incurred solely as a result of the existence of the antidumping duty
order. Antifriction Bearings (Other Than Tapered Roller Bearings) and
Parts Thereof from France, et al.; Final Results of Antidumping Duty
Administrative Reviews, 57 FR 28360 (June 24, 1992). Underlying our
logic in both these instances is an attempt to distinguish between
business expenses that arise from economic activities in the United
States and business expenses that are direct, inevitable consequences
of the antidumping duty order.
Financial expenses allegedly associated with cash deposits are not
a direct, inevitable consequence of an antidumping duty order. Money is
fungible within a corporate entity. Thus, if an importer acquires a
loan to cover one operating cost, that may simply mean that it will not
be necessary to borrow money to cover a different operating cost.
Companies may choose to meet obligations for cash deposits in a variety
of ways that rely on existing capital resources or that require raising
new resources through debt or equity. For example, companies may choose
to pay deposits by using cash on hand, obtaining loans, increasing
sales revenues, or raising capital through the sale of equity shares.
In fact, companies face these choices every day regarding all their
expenses and financial obligations. There is nothing inevitable about a
company having to finance cash deposits and there is no way for the
Department to trace the motivation or use of such funds even if it were
inevitable.
So, while under the statute we may allow a limited exemption from
deductions from U.S. price for cash deposits and legal fees associated
with participants in dumping cases, we do not see a sound basis for
extending this exemption to expenses allegedly associated with
financing cash deposits. By the same token, for the reasons stated
above, we would not allow an offset for financing the payment of legal
fees associated with participants in a dumping case.
Finally, we have previously determined that we should not use an
imputed amount theoretically associated with financing of cash
deposits. There is no real opportunity cost associated with cash
deposits when the paying of such deposits is a precondition for doing
business in the United States. Like taxes, rent, and salaries, cash
deposits are simply a financial obligation of doing business. Companies
have no choice about paying cash deposits if they want to import nor
can they dictate the terms, conditions, or timing of such payments. By
contrast, we impute credit and inventory carrying costs when companies
do not show an actual expense in their records, because companies have
it within their discretion to provide different payment terms to
different customers and to hold different inventory balances for
different markets. We impute costs in these circumstances as a means of
comparing different conditions of sale in different markets.
Comment 7: Interest Rate for Imputed U.S. Credit Expenses
Hoogovens states that in all previous reviews, the Department
calculated Hoogovens' U.S. imputed credit expenses using the weight-
averaged interest rate on Hoogovens' dollar-denominated short-term
loans in the Netherlands to finance U.S. sales. Accordingly, Hoogovens
used the same methodology in this review, and the Department verified
the interest rate used. However, in the preliminary results the
Department recalculated U.S. credit expenses using the interest rate
paid by HSUSA on loans used for another purpose. Hoogovens claims that
the Department's determination is illogical, inconsistent with the
purposes of its policy, and directly contradicts past practice.
Hoogovens argues that when an exporter incurs credit expenses for
sales to U.S. customers in dollars, in effect it is extending credit to
its purchasers on dollar terms, citing Mitsubishi Heavy Industries,
Ltd. v. United States, Slip. Op. 98-82 (CIT, June 23, 1998) and Oil
Country Tubular Goods from Austria, 60 FR 33551, 33555 (June 28, 1995).
Accordingly, Hoogovens argues, the Department uses the actual dollar-
based interest rate of the exporter as the best measure of the
exporter's imputed credit expenses, and only uses publicly available
information to establish an appropriate rate when the exporter does not
have dollar-denominated borrowings.
Hoogovens states there is no reason to use HSUSA's loans made for
other purposes, which represent a theoretical cost of borrowing, when
the actual cost of extending credit on U.S. sales is available on the
record. Hoogovens notes that the Department has previously rejected the
methodology it advances here, citing Certain Corrosion-Resistant Carbon
Steel Flat Products and Certain Cut-to-Length Carbon Steel Plate from
Canada; Final Results of Antidumping Duty Administrative Reviews, 63 FR
12725, 12742 (March 16, 1998) (``Steel from Canada''), in which the
U.S. affiliate maintained a dollar-denominated line of credit, but the
Department rejected the interest rate on this credit in favor of a
surrogate rate.
Petitioners support the Department's determination on the grounds
that loans incurred in the United States best reflect the cost of
selling to U.S. customers. They point out that in the current review of
Steel from Canada, the Department instructed the respondent to
recalculate credit expenses using the interest rate at which the U.S.
affiliate actually borrowed the funds.
Department's Position: We agree with Hoogovens that, in accordance
with the Department's established policy and practice, we should have
accepted the interest rate on its short-term dollar-denominated loans
taken out by Hoogovens rather than the rate received by HSUSA.
Accordingly, for the final results we have used the reported imputed
U.S. credit expenses.
Comment 8: Credit Expenses on Unshipped Sales
Hoogovens argues that the Department should have deducted credit
expenses on unshipped home market sales on the grounds that these sales
are included in the calculation of the dumping margin. Hoogovens claims
there is no logical reason for imputing these expenses on shipped sales
but not on unshipped sales. Further, Hoogovens argues that its method
of reporting these expenses using the average days to payment on a
customer-specific basis has been previously accepted by the Department
and is reasonable.
Petitioners point out that there is no actual credit expense
incurred on unshipped sales. They argue that if the Department accepts
Hoogovens' claim and allows an adjustment for credit expense, then it
must also increase the gross price of unshipped sales to account for
freight revenue on them. Petitioners note that such an adjustment would
be consistent with Department practice.
Department's Position: We agree with Hoogovens. The Department
recalculated Hoogovens' reported credit expenses on home market sales
in order to correct the payment dates for some sales. To calculate
imputed credit expenses on receivables, we take the
[[Page 11832]]
difference between the date of payment and the date of shipment and
multiply by the daily short-term interest rate and the gross price,
obtaining the per unit expense. However, in the case of unshipped
quantities, there is neither a shipment date nor a payment date. In
previous reviews the Department accepted Hoogovens' claimed credit
expenses on unshipped sales, calculated on the basis of the customer-
specific average number of days between shipment and payment. Since we
are including these sales in the margin calculation, it is reasonable
to make a deduction for imputed credit expenses. This is consistent
with the Department's practice in Final Determination of Sales at Less
Than Fair Value: Certain Pasta from Italy, 61 FR 30324 (June 14, 1996).
We disagree with petitioners that inland freight should be added to
the reported gross price. We verified that the reported price already
includes freight in those cases where the terms of sale include inland
freight.
Comment 9: Correction of Ministerial Error
Petitioners point out that an error found at verification in
reporting international freight and brokerage expense for one U.S. sale
was not corrected in the preliminary results. Hoogovens responds that
the freight expense by petitioners is incorrect, and provides the
figures calculated by the Department at verification. Hoogovens
Verification Report at 20.
Department's Position: We agree with petitioners that an error
found at verification was not corrected in the preliminary results
through an oversight. However, the international freight charge
suggested by petitioners is inconsistent with the amount calculated by
the Department at verification. See Verification Exhibit 27. We have
corrected the international freight and brokerage expenses for this
sale in the final results of this review.
Comment 10: Reimbursement
Petitioners argue that the Department should apply its
reimbursement regulation. They note that during part of the POR, HSUSA
was the importer of record and was reimbursed by Hoogovens for cash
deposits paid against antidumping duties to be assessed. Petitioners
claim that the restructuring of Hoogovens' U.S. operations was in
essence financial intermingling aimed at avoiding the application of
the reimbursement regulation.
During the remainder of the POR, Hoogovens served as the importer
of record. Petitioners claim that from a commercial standpoint, there
has been no substantive change, and that the subject merchandise is
still being sold to U.S. customers at unremediated dumped prices.
Petitioners point out that in previous reviews of this proceeding, the
Department has required the importer to demonstrate that it has the
financial resources to pay antidumping duties. See Certain Cold-Rolled
Carbon Steel Flat Products from the Netherlands; Final Results of
Antidumping Duty Administrative Review, 63 FR at 13214 (March 18,
1998). Petitioners argue that these resources must be acquired for
legitimate business needs rather than for the purpose of paying
antidumping duties, and that all of the Department's prior work will
have been for naught if a remibursement finding can be avoided simply
by listing the foreign producer as the importer of record.
Consequently, petitioners conclude, the Department should find that
reimbursement is occurring whenever the foreign producer is also the
importer of record. Petitioners claim that the Department recognized
that the reimbursement regulation may be interpreted to apply in such
situations in Circular Welded Non-Alloy Steel Pipe and Tube from
Mexico; Final Results of Antidumping Duty Administrative Review, 63 FR
33041, 33044 (June 17, 1998). They also cite the statement in the SAA
that ``Commerce has full authority under its current regulations (19
CFR 353.26) to increase the duty when an exporter directly pays the
duties due, or reimburses the importer, whether independent or
affiliated, for the importer's payment of duties.'' SAA at 886.
Petitioners conclude that the interpretation that sales for which
Hoogovens acted as the importer of record fall within the reimbursement
regulation is the only interpretation that will prevent the remedial
effects of the antidumping law from being frustrated.
Hoogovens replies that the Department lacks the statutory authority
to apply the reimbursement regulation on the basis of affiliated party
transactions. While Hoogovens acknowledges that the CIT rejected this
argument in Hoogovens' appeal of the final results of the first review,
Hoogovens believes that the correct interpretation of the Department's
authority is that expressed by the Court of Appeals in footnote 2 of
its opinion in The Torrington Co. v. United States, 127 F.3d 1077,
where it stated, ``the statute does not seem to authorize a further
assessment of duty to the same importer on the theory that a foreign
supplier may have helped an importer with its duty burden.''
Hoogovens argues there is substantial verified evidence on the
record in this review to support the Department's decision not to apply
the reimbursement regulation in the preliminary results. This evidence
includes the Agency Agreement, the refund by HSUSA to Hoogovens of the
amount of antidumping duties calculated by the Department in its final
results in the 1993/94, 1994/95 and 1995/96 administrative reviews, and
HSUSA's assumption of liability for antidumping duties for the period
1993-96, as shown in its audited 1997 financial statements.
Accordingly, Hoogovens argues, the Department should not apply the
regulation to sales for which HSUSA was the importer of record.
Hoogovens notes that the CIT recently affirmed the Department's
decision not to apply the reimbursement regulation in the final results
of the second administrative review (1994/95). Bethlehem Steel Corp. v.
United States, Slip Op. 98-145 at 13-17 (October 14, 1998), and argues
that petitioners have failed to advance any argument or evidence that
would support a different outcome in this review, continuing to raise
the same arguments regarding the restructuring of Hoogovens' U.S.
operations that they raised unsuccessfully in previous reviews.
Hoogovens points out that it has entered into a joint venture with
Weirton Steel Company to build a galvanizing plant in Indiana, which
was a major element of Hoogovens' restructuring, which also included
the transfer of HSUSA of the Rafferty-Brown companies. As a result,
HSUSA's consolidated sales revenues have substantially increased.
Hoogovens argues that this restructuring was intended to organize its
U.S. holdings in the same manner as in other countries, and are
legitimate business arrangements which do not constitute any basis to
double its antidumping duty liability.
Hoogovens argues further that applying the reimbursement regulation
in situations where the exporter acted as importer of record would mean
treating those duties as a cost, and double-counting those duties in
the calculation of a respondent's antidumping duty liability, which is
contrary to the Department's longstanding policy. Hoogovens rejects
petitioners' interpretation of the SAA at 886, pointing out that they
fail to explain why this reference to an exporter who ``directly pays
the duties due'' necessarily refers to an exporter who is also the
importer. Hoogovens claims
[[Page 11833]]
there is nothing in the SAA to suggest such a reading, and points out
that the SAA states that the Department ``intends no change in its
practice in this area.'' SAA at 886. Hoogovens states its is unaware of
any instance prior to the SAA in which the Department applied the
regulation where the exporter was the importer of record, and concludes
there is no basis for petitioners' argument that their interpretation
was ``the very one adopted'' by the Congress and the administration in
the SAA. Moreover, Hoogovens points out, the SAA expressly rejects the
concept of duty as a cost (SAA at 885), suggesting that this undermines
petitioners' interpretation. Finally, Hoogovens notes that petitioners
appear to argue that the Department should apply the reimbursement
regulation simply because it has found reimbursement in a previous
review, and asserts that Hoogovens is entitled to take steps to reduce
its antidumping duty liability from review to review.
Department's Position: We disagree with petitioners that the
Department should invoke 19 CFR 351.401(f), the reimbursement
regulation, in this case. Consistent with our findings in the previous
review, we find in the current review that the amended agency agreement
between HSUSA and Hoogovens continues in force, and that HSUSA,
pursuant to its contractual obligations, continues to repay advances
for antidumping duty deposits. Further, for those sales in which HSUSA
was the importer of record, we find that HSUSA (1) continues to be
solely responsible for the payment of the antidumping duties in this
review, and (2) is able to generate sufficient income to pay the
antidumping duties to be assessed in this review. See Exhibit A-30
(Agency Agreements) of Hoogovens' January 30, 1998, supplemental
response (Proprietary Version); HSUSA's audited financial statements in
Exhibit A-11 (Hoogovens Steel Division Audited Financial Statements) of
Hoogovens' Section A response (Proprietary Version, October 6, 1997)
and in Verification Exhibit 2 of the verification at HSUSA on July 15,
1998; and Exhibit B-31 (Refund of Duties) in Hoogovens' May 6, 1998
supplemental response (Proprietary Version). Further, the corporate
restructuring of HSUSA entailed entering into a joint venture with
Weirton Steel Company and the transfer of the Rafferty-Brown companies
to HSUSA. As the Department has recognized, and the Courts have
affirmed, affiliated companies can transfer funds for a variety of
reasons, unrelated to reimbursement of antidumping duties. See
Torrington Co. v. United States, 127 F.3d 1077 (Fed. Cir. 1997). As in
the previous review, the Department does not construe this
restructuring to be inappropriate financial intermingling or
reimbursement within the meaning of 351.402(f) as petitioners suggest.
In the present case, the facts and circumstances surrounding the
corporate restructuring are clear and consistent with the purposes of
the regulation.
Finally, we disagree with petitioners that the reimbursement
regulation is applicable where the importer and exporter are the same
corporate entity. Our decision as to reimbursement is based upon our
regulatory interpretation of 19 CFR 351.401(f), which is that two
separate corporate entities must exist in order for the Department to
invoke the reimbursement regulation. See Circular Welded Non-Alloy
Steel Pipe and Tube from Mexico; Final Results of Antidumping Duty
Administrative Review, 63 FR 33041, 33044 (June 17, 1998). While we
recognize that petitioners' position may be a permissible
interpretation of the regulation, the Department continues to believe
that our interpretation is more appropriate. Accordingly, for these
final results, we have not invoked the Department's reimbursement
regulation with respect to Hoogovens.
Comment 11: Level of Trade
Hoogovens urges the Department to maintain its conclusion in the
preliminary results that there are no level of trade (LOT) differences
for any sales. Hoogovens points out that this conclusion was based on
an exhaustive investigation of Hoogovens' selling functions and
channels of distribution in both the U.S. and home markets. The LOT
issue was addressed in the original and two supplemental
questionnaires, and the Department conducted extensive interviews with
sales personnel and technical service and research managers during its
verifications in both IJmuiden and Scarsdale. Hoogovens notes that the
Department reviewed the record evidence with respect to nine different
selling functions and activities performed by Hoogovens: (1) Strategic
and economic planning; (2) market research; (3) advertising; (4)
inventory maintenance; (5) post-sale warehousing; (6) freight and
delivery arrangements; (7) technical support services, warranty
services and customer-specific R&D support; (8) computer, legal, and
accounting assistance; and (9) procurement services. The only
observations the Department noted were: (1) Larger customers received
more frequent visits from sales personnel, and (2) home market
automotive customers received a higher level of service than other end
users, though sales are at the same stage of marketing as all other
home market sales.
Hoogovens argues that the record evidence does not even approach a
showing of the level of differences in selling functions performed for
different customers required for a finding of different LOTs under
existing practice; citing AFBs at 33331; Certain Stainless Steel Wire
Roads from France; Final Results of Antidumping Duty Administrative
Review, 63 FR 30185 at 30190 (June 3, 1998), and Pipe from Taiwan at
1439.
Department's Position: Based on our examination of the selling
functions performed for U.S. and home market ales, we agree Hoogovens
that all sales are made at the same level of trade. Although in the
preliminary results of review the Department invited the filing of
additional information and comment on this issue, petitioners did not
comment.
Final Results of Review
As a result of our review, we determine that the following
weighted-average margin exists:
------------------------------------------------------------------------
Margin
Manufacturer/exporter Period of review (percent)
------------------------------------------------------------------------
Hoogovens Staal B.V..................... 8/1/96-7/31/97 0.92
------------------------------------------------------------------------
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. For assessment
purposes, the duty assessment rate will be a specific amount per metric
ton. The Department will issue appraisement instructions directly to
the Customs Service.
[[Page 11834]]
Furthermore, the following deposit requirements will be effective
upon publication of this notice of final results of review for all
shipments of cold-rolled carbon steel flat products from the
Netherlands entered, or withdrawn from warehouse, for consumption on or
after the publication date, as provided for by section 751(a)(1) of the
Act: (1) the cast deposit rate for the reviewed company will be the
rate for that firm as stated above; (2) if the exporter is not a firm
covered in this review, or the original less than fair value (LTFV)
investigation, but the manufacturer is, the cash deposit rate will be
the rate established for the most recent period for the manufacturer of
the merchandise; and (3) if neither the exporter nor the manufacturer
is a firm covered in this review, the cast deposit rate will be 19.32
percent. This is the ``all others'' rate from the amended final
determination in the LTFV investigation. See Amended Final
Determination Pursuant to CIT Decision: Certain Cold-Rolled Carbon
Steel Flat Products from the Netherlands, 61 Fed. Reg. 47871 (September
11, 1996). These deposit requirements, when imposed, shall remain in
effect until publication of the final results of the next
administrative review.
This notice serves as a final reminder to importers of their
responsibility under section 353.26 of the Department's regulations to
file a certificate regarding the reimbursement of antidumping duties
prior to liquidation of the relevant entries during this review period.
Failure to comply with this requirement could result in the Secretary's
presumption that reimbursement of antidumping duties occurred and the
subsequent assessment of double antidumping duties.
This notice also serves as a reminder to parties subject to
administrative protective order (APO) of their responsibility
concerning the disposition of proprietary information disclosed under
APO. Timely notification of return/destruction of APO materials or
conversion to judicial protective order is hereby requested. Failure to
comply with the regulations and the terms of an APO is a sanctionable
violation.
This administrative review and this notice are in accordance with
sections 751(a)(1) and 771(i)(1) of the Act and sections 351.213 and
351.221 of the Department's regulations.
Dated: March 3, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-5945 Filed 3-9-99; 8:45 am]
BILLING CODE 3510-DS-M
